For those not familiar with mortgages or lenders on a regular basis the borrowing process generally can appear to involve a host of red tape and other restrictions, and at times can feel intimidating as a result.
In some respects it is indeed a complicated yet necessary field and although not all homeowners can be experts, a certain basis of knowledge is required for any borrower to know what advice they can seek, and what rights they have. Many homeowners also have a number of shared misconceptions when it comes to mortgages, however. Here Lee Flavin, CEO of RateSwitch, outlines what the most common misconceptions are and explains how to avoid them yourself during the borrowing process.
 You have to have a job for six months before you can get a mortgage
This is not necessarily true. Most mortgage lenders will not want to initially lend to someone who is still in the probationary period of their current job due to risks attached to the security of their income, but may simply require an employment history for the last 12 months to be provided instead. There will always be some lenders that do not require an applicant’s record of employment to be as extensive as others – meaning that where one lender declines an application, not all others will.  However, when it comes to rate switching, the duration of your job position doesn’t always make a difference. As long as there is continuous employment evident, lenders shouldn’t have a problem approving a change of rate.
The only way to get a better mortgage rate is if I remortgage to another lender
This is one of the most common misconceptions amongst the majority of mortgage customers, and all too often leads to homeowners suffering in silence thinking that they have no choice in the matter when, more often than not, they do. It’s all too easy to assume that a sudden change in employment or other circumstances, that might contribute to a current mortgage rate feeling unmanageable, is the borrower’s burden alone. Yet, what you may not realise is that mainstream lenders usually have a range of loyalty rates available for existing customers. Some lenders even allow you to change within a few months of the end of your fixed deal rather than become stuck on a standard variable rate (SVRs).
 You’re now self-employed so you’re not able to get a better mortgage rate
A change in circumstances can be a terrifying situation for those with a mortgage and many are under the impression that, if they become self-employed, they will not be able to get a better mortgage rate. Despite this, the number of Brits who are self-employed is at its highest level in 40 years. Therefore, it’s important for those individuals to know that they have options available to them. You may well find that you have better options for mortgage rates with your current lender than you first thought, so it’s always worth checking what options are available to you in re-negotiating with them. In already meeting your payments at their higher rate, logic suggests that as a known customer you will be able to meet the cost of a new amount at a lower rate easily.
The pricing of mortgage deals is based on your overall credit score
This is a very common misconception as many people believe that a poor credit score equals a poor rate. Initially when taking out a mortgage with your lender, your credit score can often play a role in the decision of the lender on whether they choose to lend to you or not. And certainly, some lenders are stricter than others. Different lenders use a variety of ways to calculate your credit score which means that if you are refused by one lender, you may not necessarily be rejected by all. If you choose to review your mortgage deal later on with your current lender, however, it should be the loan to value that is taken into account primarily. Pricing with existing lenders overall is very transparent, which is what enables services like Rateswitch to operate effectively. So although it is important at the beginning of the relationship with your lender, it doesn’t necessarily stay that way for the lifetime of your mortgage.
You need a significant deposit for your home
Although it can still be quite an intimidating figure, the average amount required for a mortgage deposit is 22% with the average first-time buyer saving for up to 10 years for a house deposit. So for a property worth £100,000, the average person can expect to pay an initial £22,000 and then continue to make mortgage repayments at their lender’s standard rates. There are, however, schemes available to first time buyers in particular that can help reduce this figure dramatically. For example, the UK government currently offers a ‘Help to Buy’ ISA scheme which adds a government subsidy onto your saving, with a maximum of £3,000.
When you die, your mortgage becomes obsolete
This one certainly isn’t true. If an individual passes away, their mortgage actually gets passed onto their next of kin or closest family member. Therefore, the debt of the mortgage has to be paid before any money from the estate can be claimed. If the mortgage cannot be repaid, then the house would have to be sold. Similarly, anyone sharing a joint mortgage with a partner who passes away becomes solely responsible for that mortgage, meaning if this is not affordable they may also need to consider selling their home in the event of their death. Paying into a life insurance policy for one or both of those taking out the mortgage at the outset can help avoid such a situation arising, however.
 There are also many other misconceptions that can come into play for many homeowners during the borrowing process, but in any case securing the best deal and ensuring affordability at all times relies first on ascertaining a solid understanding of the rates available, alongside your basic rights as a mortgage consumer. Today the internet offers all homeowners and would-be property buyers access to a wealth of information, but asking your chosen or prospective lender to explain things in more detail also goes a long way too. Ultimately, your mortgage advisor is there to help you in taking on what, for many, is the biggest investment they will ever make. It’s important to remember this during any discussions you might undertake during the home loan borrowing process.
